Monday, August 23, 2010

Disintermediation : Power to the Consumer

By C.L. Phillips

Yellow dollar sign
When you look at the coming changes in the publishing industry, there's one word you should know. Disintermediation. It's a fifty cent word that means billions of dollars of cost are going to be driven out of the supplier-distributor-consumer supply chain.

Do you remember when mainframe computers ruled banking? Or when you used a travel agent to make airline reservations? If you were born after 1980, you probably don't. A more recent example, remember when you went used iTunes to get new music instead of going to a record store to buy a CD.

Mainframe computers have been replaced by minicomputers, by personal computers, and by lightweight machines that access applications on the internet (e.g. iPad). General travel agents were replaced by self-service airline reservations. The travel agents that survive today were forced to specialize and market to a niche. Example : Cruise Ship Travel Agents, or China travel agents. In the music business, Tower Records closed store after store. If you want to buy a CD now, you have to find a quirky little music shop or hit the music section of the Barnes and Noble. Even Best Buy and Walmart have significantly reduced their inventory.

Disintermediation happens when technology provides a new method for connecting suppliers with consumers. Computing power decentralized. Travel information became available to individual travelers. Knowledge decentralized. iTunes put entire music catalogs at your fingertips.

Disintermediation and decentralization of power, control, and knowledge travel together.

In any industry, if you make your living from the middle, as a distributor, disintermediation strikes fear in your heart. Margins decline. Processes and systems have to change quickly or your costs can drive you out of business. The very people that thrived on centralized control are the ones that suffer the most when the shift comes.

I actually loved my travel agent. She took care of me. She saved me from a snowstorm in Newark, NJ and put me on the the last plane headed west (to Memphis) so I could make it to my father's sixtieth birthday party on time. But even with stellar service, I now make my own travel reservations. Disintermediation puts more control in the hands of the consumer, and the consumer responds.

How will the consumer respond when the publishing industry completes its transition? Can you imagine a world where the reader has the resources to easily find the books they want?

As authors, we need to know what the readers will do. How will you find the books you want in this new worlds? How do you find the books you want today? Inquiring minds want to know. Share your tips in the comment section. Together we may have the information we need to surf this wave, starting now.

Write on!
C.L Phillips writes mystery novels while nestled under a hundred-year live oak tree in downtown Austin. Except in August. C.L writes about the the gap between what people want and what they actually do. Broccoli or chocolate chip cookies, anyone? Check out her web site: or find her onTwitter: @clphillips787


Linda Leszczuk said...

But I don't want bookstores to go away. I love to go in and browse and look at a page or two here and there. Online/direct book buying maybe be fast and easy but it's not as much fun. Just my opinion.

Sheila Connolly said...

This is such a fascinating, if confusing, time in the publishing business, and things are changing so fast! Both writers and publishers are scrambling to keep up.

But I'm troubled by the fact that purely electronic book shopping will eliminate the process of browsing--drifting along between rows of new books, picking one up because you've heard something about it (but forgotten it until that moment) or the cover is pretty, leafing through a few pages to see if you like the style. Sure, buying on-line may be more efficient, but you'll lose the wonderful serendipity of discovering a new author and falling in love.

Norma said...

I have to admit I ordered my first books from last month. One I wanted was published a few years ago and not available at the bookstore. I ordered two more to get free shipping.

But I still prefer the bookstore.

Kaye George said...

Your points are very good, except the one about mainframe computers. Most of the banking and insurance applications are still done on them. There is no substitute for them today.
Kaye, a career mainframe programmer